India’s journey toward becoming a global hub for arbitration has gained significant momentum with the introduction of the Arbitration and Conciliation (Amendment) Act, 2019. Among the critical changes brought about by the Amendment is the establishment of the Arbitration Council of India (ACI), a body designed to improve the quality and efficiency of arbitration in India.

Sections 43A to 43M of the Arbitration and Conciliation Act, 1996 outline the framework governing the Arbitration Council of India and define its role in fostering high standards of arbitration practice. These sections cover the constitution, powers, and responsibilities of the ACI, ensuring it serves as an independent, powerful authority for the development of arbitration in India.

Let’s take a closer look at these sections and understand the importance of the Arbitration Council of India and its functions in the context of arbitration proceedings.

 

Role and Function of the Arbitration Council of India (ACI)

The Arbitration Council of India was created to provide the necessary infrastructure, policy, and regulatory framework to ensure that arbitration in India is conducted in accordance with the best practices. Here’s a breakdown of its role and responsibilities:

• Improving Arbitration Standards: One of the primary purposes of the ACI is to improve arbitration standards and maintain consistency across arbitration proceedings in India.
• Training and Education: The Council is also responsible for training arbitrators and conducting awareness programs to promote the understanding of arbitration laws and practices.
• Quality Control: The ACI ensures that the quality of arbitrators and arbitral proceedings in India aligns with international standards.
• Accreditation and Regulation: It accredits arbitral institutions, ensuring that only recognized institutions are authorized to conduct arbitration proceedings in India.

 

Structure of the Arbitration Council of India

The Arbitration Council of India is an autonomous body that is empowered to take decisions to further the cause of arbitration in the country. Its structure, as laid down in the provisions under Sections 43A to 43M, is as follows:

1. Constitution of the Council (Section 43A)

The Arbitration Council of India is constituted by the Central Government and is headed by a Chairperson. The Council also comprises the following members:

• One Supreme Court Judge or a High Court Judge with extensive experience in arbitration.
• The Secretary of the Ministry of Law and Justice, who acts as a member.
• Three eminent persons with expertise in international commercial arbitration, economics, and law. 

2. Appointment of Members (Section 43B)

The appointment process is crucial to ensure that the members of the Arbitration Council of India are professionals with the required qualifications and experience in arbitration matters. The Chairperson and other members are selected by a committee formed by the Central Government, based on their qualifications, experience, and reputation in the arbitration field.

3. Powers and Functions of the Council (Section 43C to 43M)

The Arbitration Council of India has several critical powers to regulate and promote arbitration in India:

Section 43C: Functions of the Arbitration Council of India

Section 43C outlines the general functions of the Arbitration Council of India (ACI). The primary function of the ACI is to regulate and promote arbitration in India. The Council is tasked with ensuring that the arbitration process is fair, impartial, and efficient. To achieve this, it undertakes several specific responsibilities:

• Regulating Arbitral Institutions: The ACI is responsible for accrediting and monitoring the performance of arbitral institutions in India. It ensures that only qualified institutions adhere to the required standards, thus upholding the credibility of arbitration proceedings.
• Setting Standards: The Council has the authority to set and oversee the standards for arbitrators, including their training, conduct, and performance evaluation. By establishing uniform standards for arbitrators, the ACI ensures consistency across all arbitration proceedings in India.
• Promoting Arbitration Awareness: The ACI works to raise awareness about arbitration as an effective mechanism for dispute resolution. It organizes training programs, seminars, and conferences to help practitioners, students, and the general public understand the benefits of arbitration over traditional litigation.
• Encouraging International Practices: The ACI also ensures that the practices followed in Indian arbitration proceedings align with international standards. This is critical to attract foreign parties to choose India as a destination for international commercial arbitration.
• Monitoring Arbitrators’ Competence: The ACI is entrusted with the responsibility of monitoring the competence of arbitrators. It assesses their qualifications and ensures that only capable and experienced individuals are listed as eligible arbitrators for arbitration cases.

Section 43D: Maintenance of a List of Arbitrators

Section 43D mandates the ACI to maintain a list of qualified and competent arbitrators who can be appointed to handle arbitration disputes. This list is a crucial function, as it allows parties in an arbitration to select arbitrators based on their qualifications and experience.

• Criteria for Inclusion: The ACI sets out the criteria for inclusion in this list, ensuring that only professionals with a proven track record in arbitration are included. Arbitrators may include individuals from various fields such as law, business, and academia.
• Periodic Evaluation: The list is not static; it is periodically reviewed, and arbitrators are evaluated to ensure they continue to meet the necessary qualifications and standards.
• Ensuring Diversity: The ACI is also responsible for ensuring diversity in its list of arbitrators. This includes diversity in terms of gender, geography, and expertise. This promotes inclusivity and ensures that arbitration proceedings are fair and impartial.

Section 43E: Development of Guidelines for Arbitrators

Section 43E empowers the ACI to develop guidelines for the conduct of arbitrators. These guidelines are crucial in ensuring that arbitrators adhere to a consistent and ethical standard while conducting arbitration proceedings.

• Code of Conduct: The guidelines include a code of conduct that outlines the ethical standards expected from arbitrators. This code helps maintain the integrity of the arbitration process and prevents any conflicts of interest or bias.
• Qualification and Training: The ACI is responsible for establishing guidelines on the qualifications and training of arbitrators. These guidelines ensure that arbitrators possess the necessary expertise and knowledge to handle disputes effectively.
• Disciplinary Measures: If an arbitrator is found to have acted inappropriately or failed to meet the required standards, the ACI has the power to impose disciplinary measures, which may include removal from the list of arbitrators.

Section 43F: Functions Relating to Promotion of Awareness and Training

Section 43F emphasizes the importance of promoting awareness and providing adequate training for all stakeholders involved in arbitration. The ACI is tasked with:

• Conducting Training Programs: The Council is responsible for organizing training programs for arbitrators, legal professionals, and other stakeholders. These programs focus on the intricacies of arbitration law, procedure, and best practices.
• Creating Educational Resources: The ACI also develops and disseminates educational resources to improve the understanding of arbitration among the public, legal professionals, and businesses.
• Encouraging Research: By encouraging research in arbitration, the ACI fosters the development of new methods, tools, and practices that can enhance the efficiency and effectiveness of the arbitration process.
• International Collaboration: The ACI collaborates with international arbitration bodies to share knowledge and resources, which helps to align Indian arbitration practices with global standards.

Section 43G: Accreditation of Arbitral Institutions

Section 43G grants the ACI the authority to accredit arbitral institutions that meet its established standards. The accreditation process ensures that only reputable and capable institutions are authorized to conduct arbitration proceedings.

• Criteria for Accreditation: The ACI sets out specific criteria that arbitral institutions must meet to become accredited. These criteria may include factors such as the institution’s experience, infrastructure, and ability to conduct arbitration efficiently.
• Continuous Monitoring: After accreditation, the ACI monitors the performance of arbitral institutions to ensure that they continue to meet the required standards. Institutions that fail to meet the standards can have their accreditation revoked.

Section 43H: Funding and Financial Powers

Section 43H empowers the ACI to manage its financial resources. This includes collecting fees for services such as the accreditation of institutions and the certification of arbitrators.

• Establishing Fees: The ACI has the authority to set fees for the various services it offers, including training programs, certification, and arbitration-related services.
• Financial Autonomy: The ACI is financially independent and has the power to manage its funds, ensuring that it can carry out its functions without external interference.

Section 43I: Monitoring and Review

Section 43I highlights the ACI’s role in monitoring and reviewing the arbitration process. The Council regularly assesses the functioning of arbitral institutions and the quality of arbitrators to ensure compliance with the established standards.

• Performance Evaluation: The ACI conducts periodic evaluations of arbitration proceedings and the performance of arbitrators to identify areas of improvement.
• Corrective Measures: If an institution or an arbitrator fails to meet the standards, the ACI can implement corrective measures such as providing additional training, issuing warnings, or revoking accreditation.

Section 43J: Power to Make Rules

Section 43J empowers the Arbitration Council of India to make rules for the implementation of its functions. These rules help to provide clarity on the procedures for accreditation, certification, and other activities carried out by the ACI.

• Rule-making Authority: The ACI has the authority to make rules governing the accreditation process, training of arbitrators, and the functioning of arbitral institutions.
• Compliance with International Standards: The rules made by the ACI are designed to ensure that India’s arbitration framework aligns with international arbitration practices and meets global standards.

 

Significance of the Arbitration Council of India

The Arbitration Council of India (ACI) represents a landmark step towards creating a more organized and efficient arbitration ecosystem in India. The creation of the ACI is significant for several reasons:

1. Improving India’s Global Arbitration Standing

India has long been seen as a jurisdiction with a complicated and often sluggish judicial system. However, with the formation of the Arbitration Council of India, the country aims to develop a more efficient and robust system for dispute resolution. This move is expected to improve India’s global ranking in the arbitration sector and position the nation as an arbitration-friendly jurisdiction.

2. Providing Better Regulatory Oversight

One of the most vital functions of the Arbitration Council of India is to ensure the quality and integrity of arbitration proceedings. By having an independent body that regulates the conduct of arbitrators and arbitral institutions, India ensures the fairness and impartiality of arbitration, which is essential for attracting international commercial disputes.

3. Establishing Uniform Standards

The ACI sets uniform standards for the training and certification of arbitrators, which helps in bringing consistency and fairness to the process. This move helps ensure that both domestic and international arbitration in India follows the best practices.

 

Challenges and Criticism of the Arbitration Council of India

Despite its significant role, the Arbitration Council of India faces some challenges and criticisms:

1. Lack of Clarity in Role

Some critics argue that the role of the ACI in regulating arbitration is not fully defined. The ACI is meant to be an autonomous body, but there are concerns regarding the overlap of functions with other arbitration bodies, such as the Indian Council of Arbitration and the Delhi International Arbitration Centre.

2. Limited Resources for Implementation

Another criticism is that the ACI may not have sufficient resources to monitor all arbitral institutions and proceedings effectively. The effectiveness of the ACI will depend on how well it can balance its regulatory functions with adequate infrastructure and personnel.

3. Potential for Bureaucratic Hurdles

While the idea of an autonomous body is promising, critics worry that the ACI could become bogged down by bureaucratic red tape, which could hinder the efficiency of its operations.

 

Conclusion

The Arbitration Council of India plays a pivotal role in shaping the future of arbitration in India. By setting standards, accrediting institutions, and maintaining a list of qualified arbitrators, the ACI aims to ensure that arbitration in India meets international standards. As India continues its journey toward becoming a global arbitration hub, the establishment of the Arbitration Council of India is an essential step in this direction.

While challenges remain, especially regarding its resource allocation and role definition, the Arbitration Council of India is poised to make a significant impact on the arbitration landscape in India. With the proper implementation of its powers and responsibilities, the ACI could potentially elevate India to a position of leadership in global dispute resolution.

 

Frequently Asked Questions (FAQs)

1. What is the Arbitration Council of India (ACI)?

The Arbitration Council of India (ACI) is an autonomous body established under the Arbitration and Conciliation (Amendment) Act, 2019, to improve the quality of arbitration in India by setting standards, accrediting institutions, and overseeing the training and conduct of arbitrators.

2. What are the powers of the Arbitration Council of India?

The ACI is responsible for setting standards for arbitration institutions, maintaining a list of qualified arbitrators, promoting awareness, and ensuring the effective functioning of arbitration proceedings in India.

3. Who can be a member of the Arbitration Council of India?

The Arbitration Council of India comprises a Chairperson (usually a retired judge of the Supreme Court or High Court) and three eminent persons with expertise in law, economics, and international commercial arbitration, along with a Secretary from the Ministry of Law and Justice.

4. How does the Arbitration Council of India promote the arbitration ecosystem?

The ACI works to promote awareness of arbitration as an alternative dispute resolution mechanism, organizes training programs, and sets guidelines for arbitrators and institutions to follow in India.

5. Can the Arbitration Council of India regulate arbitration proceedings?

Yes, the Arbitration Council of India has the authority to regulate arbitration proceedings in India by accrediting institutions, maintaining standards, and ensuring compliance with its guidelines.

6. How does the Arbitration Council of India affect global arbitration?

The ACI aims to align India’s arbitration practices with global standards, making it an attractive jurisdiction for international arbitration and helping improve India’s ranking as a dispute resolution hub.

7. What challenges does the Arbitration Council of India face?

Challenges include defining its role clearly in relation to other bodies, ensuring sufficient resources for implementation, and avoiding bureaucratic hurdles that could delay its operations.

8. Why is the Arbitration Council of India important for India’s arbitration framework?

The ACI plays a crucial role in ensuring the integrity, efficiency, and international competitiveness of the arbitration process in India by regulating institutions, setting standards, and training arbitrators.